In more detail
The origin of these jurisprudences is a merger of companies in which, when trying to file the notice of cancellation of the Tax ID (RFC for its acronym in Spanish) of the merged company, as a notice of merger, the procedure provided for in form 316/CFF, contained in Annex 1-A of the RMF for 2022, was filed on the SAT portal. However, the authority decided to deny the procedure and therefore the cancellation of the RFC of the merged company, arguing that it did not comply with all the validation requirements in accordance with Article 27, paragraph d), section IX of the CFF.
Article 27, paragraph d), section IX of the CFF establishes that taxpayers filing the notice of cancellation of the federal taxpayer registry (RFC for its acronym in Spanish) due to a merger must comply with the requirements established by the tax authority through general rules, among which are: (i) Not being subject to the exercise of verification powers, nor having credits owed to them; (ii) Not being included in the lists referred to in Articles 69, 69-B and 69-B Bis of the CFF; and, (iii) That the income declared and withheld match the tax receipts.
In addition, form 316/CFF added the requirement of not having carried out transactions with taxpayers that have been published in the list referred to in Article 69-B, fourth paragraph of the CFF.
Therefore, the taxpayer argued that the requirements to cancel the RFC in case of a merger are disproportionate and that form 316/CFF imposes additional requirements not foreseen in the law, thus violating the principle of legal reserve.
Nevertheless, the Supreme Court upheld the constitutionality of Article 27, paragraph D, section IX, of the CFF and the validity of form 316/CFF, considering the following:
- Regarding article 27, paragraph D, section IX, of the CFF:
- The purpose of the rule is to prevent tax evasion and avoid the improper use of the merger of companies by granting powers to the tax authority to regulate the procedure for the cancellation of the RFC of companies with irregularities.
- The rule is reasonable and proportional because: a) it seeks to ensure that companies are up to date with their tax obligations before cancelling their RFC; b) the tax authority is not considered to exercise extra-legal verification powers, but rather management powers; and c) the measure is suitable and necessary to avoid the improper use of the merger figure.
- Regarding form 316/CFF:
Form 316/CFF does not violate the principle of reserve of law and hierarchical subordination, since: a) article 27, section D, fraction IX, of the CFF empowers the tax authority to issue general rules; b) the form details the legal requirements established in Law, without exceeding them; and, c) the tax authority has configurative freedom to regulate the cancellation notice within the legal framework.
Recommended actions
In view of the above precedents, we suggest that in future cases in which a merger of companies is carried out, compliance with the requirements established in both Article 27, Section D, subsection IX, of the CFF, and those of form 316/CFF, should be verified.
On the other hand, in the case of mergers carried out previously and in respect of which there have been problems in filing the formalities, it is necessary to evaluate the risk in the sense that the merger may be considered as an alienation.
Our multidisciplinary team of tax specialists will be pleased to assist you in evaluating the impact of these criteria on the merger notices to be filed by the merging companies, as well as on the RFC cancellation procedures of the merged companies.
Key point
One of the problems that arose due to the practical impossibility of filing the pre-validation referred to in form 316/CFF is that the merger could be considered as a disposition of assets for tax purposes, due to the failure to file the merger notice within the term set forth in Article 14-B of the CFF, as well as Article 29 of its Regulations.
In this regard, the Supreme Court does not analyze in detail the fact that a notice of RFC cancellation is not precisely a notice of merger, but only an alternative for the benefit of the taxpayer. However, on the one hand, it establishes that it is not articles 27, paragraph D, section IX of the CFF or 30 of its Reles that determine when the merger of companies is considered a disposition of assets and when it is not, given that this is specifically provided for in articles 14, section IX, and 14-B, section I, of the same law, and on the other hand, it considers that it is necessary to observe and comply with these requirements in order for the merger not to be considered a disposition of assets.
Given this problem, which from our perspective has not been overcome, we suggest case-by-case analysis in order to evaluate and plan a defense strategy should the SAT attempt to consider the merger as a disposition of assets for tax purposes.
